How To Check if an Online Escrow Company is Legitimate
Buying or selling high-value goods and services online has many risks. Apart from dealing with fraudulent sellers or buyers, one of the many risks you will encounter is dealing with a fake escrow company.
In a study conducted by Juniper Research on online payment fraud, e-commerce fraud losses in 2022 resulted in $41.4 billion. The report also projects a 131.2% growth in fraud in 2027.
With the growing rate of vendor and payment scams in the e-commerce industry, the need to use legitimate online escrow companies for all transactions has become even more apparent. This article takes you through the steps of checking if an online escrow company is legitimate.
Steps to Check if an Online Escrow Company is Legitimate
To check if an online escrow company is legitimate, you can take the following steps:
Check for Licensure
The first thing to consider when verifying the legitimacy of an online escrow company is to check if an appropriate regulatory agency in your state licenses it.
In most countries, independent escrow companies are licensed by the Department of Financial Protection and Innovation. In Nigeria, an escrow license is issued by the Central Bank of Nigeria.
If an escrow company is not licensed by a reputable state or federal organization, it’s a sign you’re dealing with an unauthorized party and shouldn’t risk your money or goods with them.
Research the Company
Of course, the next step after checking if an online escrow company is licensed is to research the company. Researching the company involves asking questions about its transaction history and reputation.
The company’s transaction history will give you an insight into how many transactions they’ve carried out successfully. If there were failed transactions, you would also discover the reasons behind them.
On the other hand, you can check customer reviews and ratings when researching the escrow company’s reputation. Look for any red flags or complaints from past customers before doing business with the company.
Verify Contact Information
While a physical address is not compulsory for an online escrow company, it helps to know the business is registered to a valid address. You must also verify the company’s email and phone number to ensure you deal with a legitimate escrow business.
Scammers often use fake addresses and phone numbers to deceive their potential victims into believing they are legitimate.
Look for Industry Affiliations
Like other industries, escrow companies belong to associations that help them unify their services and provide seamless customer service. Often, these associations serve as avenues to verify the legitimacy of an escrow service.
Therefore, when choosing an online escrow service company, check if the company is a member of any industry association.
Check for Insurance Coverage
Most legitimate online escrow companies have liability insurance to protect their customers in case of errors or omissions on their part. This is important, especially when the escrow company handles logistics for the seller.
Before you select an escrow company, check if they have enough insurance coverage to cover your money or goods.
Ask for References
Another way to check if an escrow company is legitimate is to ask for references from past clients. Legitimate companies should have no problem providing this information.
Reference letters from past clients will not only prove the company’s legitimacy to you. They will also help you assess the quality of service the company renders to its clients.
Verify Their Endorsements
Most online escrow companies display their endorsements from known companies to prove their legitimacy. While this is a great way to prove that an escrow company is legitimate, many fake companies also display logos of legitimate companies on their websites.
Therefore, when checking if an online escrow company is legitimate, verify their endorsements by calling one or two companies that endorsed them.
Verify their Payment Methods
Legitimate online escrow companies do not accept payments from Western Union, MoneyGram, or other person-to-person transfer methods. The reason is that these payment methods are difficult to trace because they do not leave a trail.
Therefore, one of the ways to confirm that your online escrow company is legitimate is that they operate a verifiable corporate account.
Verify the Website
The company’s website shouldn’t be left out of your verification process. Since it’s an online escrow company where you’d submit some sensitive information, you should expect them to have a secure website with security certifications or badges such as SSL or Norton-secured.
A secure website guarantees your information is safe from company executives and third parties.
By taking these steps, you can ensure you’re working with a legitimate online escrow service company.
What to Do if You Fall Victim to a Fraudulent Online Escrow Company
If you think you’ve fallen victim to an online escrow scam, file a complaint with the Central Bank of Nigeria and the Economic and Financial Crimes Commission.
You should also contact your bank to block any transactions initiated when you find out. As a merchant, if your goods are with a fake escrow company, you can contact the logistics courier services company through which you sent the goods. Most courier service companies have fraud investigation departments, so they might do their bit to help recover your merchandise.
Does Online Escrow Services Work in Nigeria?
With the rising crime rate in Nigeria and the poor service delivery of most banks, online escrow services are the best way to ensure safe, transparent transactions between sellers and buyers.
Peppa.io has established trust among Nigerians who buy and sell things online, especially on social media.
Finding a Legitimate Online Escrow Company
The best way to find out if an online escrow company is legitimate is to look it up with the regulatory authority in your country. In Nigeria, for instance, check if the CBN licenses the company to offer an escrow service. That’s the only way to guarantee that your money and goods are safe with the company.
If you’re looking for a trusted online escrow company in Nigeria, then Peppa.io is your best option. Union Bank, Techstars, First Bank, MTN, Shipbubble, etc., endorse us. With over 20 million transactions completed on Peppa.io by over 1000 merchants and buyers, you’re assured of efficient service delivery from an experienced, trusted, and customer-centric workforce.